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Commodities Briefing 10.Oct 2012

Posted on 10 October 2012 by VRS |  Email |Print

The use of commodities funds holding everything from oil to gold has become increasingly popular as a broad investment tool, even as more portfolio managers have started to question how effective this will be over time.
Conventional wisdom maintains that holding large baskets of commodities can provide investors with a good hedge against inflation as well as low correlations to equities. But lately, funds investing across all types of such assets have been moving closer in-step with the S&P 500 index, notes Ned Davis Research strategist Neil Leeson………………………………………..Full Article: Source

Posted on 10 October 2012 by VRS |  Email |Print

Vitol SA, one of the world’s biggest oil traders, is being enticed from its Geneva base by Dubai and Singapore as Switzerland considers scrapping policies that made the country a global center for commodities.
“I’m concerned for the future both in Switzerland and elsewhere,” said David Fransen, chief executive officer of Vitol Group’s trading arm, citing the threat of over-regulation and higher taxes. “Other jurisdictions are actively courting us,” he said, including Malaysia and the Caribbean……………………………………….Full Article: Source

Posted on 10 October 2012 by VRS |  Email |Print

The global financial crisis of 2008-09 made clear that large global banks, such as Goldman Sachs, are just too big to fail. Could a future crisis in the commodities market reveal that trading houses such as Glencore pose a similar problem?
The question of whether these institutions have become so large and embedded in the economy that policymakers cannot let them collapse is critical. The big trading houses underpin global trade in raw materials – buying commodities from producers, transporting them and selling them to consumers. They also play an important role in extending credit to producers, from miners to farmers………………………………………..Full Article: Source

Posted on 10 October 2012 by VRS |  Email |Print

It could be due to mild dollar strength or outside market influence, but we’ve seen a number of declines in the commodity sector in recent weeks and months. I’m going to jump around to some of the major commodities, identify their moves of late and opine on whether they’re likely to continue heading south.
In the energy complex, crude oil has traded down from the $100-per-barrel level, shedding just over $10, or 10%. This move has happened within the last three weeks and, in my eyes, prices could see an additional $3 to $5 of deprecation before this leg is complete………………………………………..Full Article: Source

Posted on 10 October 2012 by VRS |  Email |Print

Leading commodity fund managers are focusing on refined oil product futures and U.S. refining stocks in the fourth quarter as U.S. gasoline and European gasoil supplies tighten, and U.S. refiners benefit from strong margins.
Managers at Quantex and Threadneedle who outperformed their peers in the third quarter are targeting the energy segment in their commodity funds, believing the sector still has legs………………………………………..Full Article: Source

Posted on 10 October 2012 by VRS |  Email |Print

Iraq’s oil exports are expected to rise to their highest in decades this month and production is on course to more than double by 2020, as it cements its place as OPEC’s second-biggest producer after Saudi Arabia.
The International Energy Agency said Iraq’s oil production would reach 6.1 million barrels per day (bpd) by the end of this decade in a mid-point scenario, from current output around 3 million bpd………………………………………..Full Article: Source

Posted on 10 October 2012 by VRS |  Email |Print

Saudi Oil Minister Ali al-Naimi said on Tuesday that the oil-rich Gulf kingdom will work to satisfy global energy markets and to “moderate” prices. “We will provide the markets with what they need,” Naimi told reporters on the sidelines of a ministerial meeting in Riyadh. “We will work to moderate prices.”
Addressing fellow ministers, Naimi warned that rising oil prices would affect economic growth across the globe, mainly in developing economies………………………………………..Full Article: Source

Posted on 10 October 2012 by VRS |  Email |Print

If ever gold was precious, it’s now. “Gold has remained at or near record high prices, even while the value of other commodities falls,” notes art expert Terry Stanfill, author of Realms of Gold: Ritual to Romance, a book that blends factual ancient art and history with modern, fictional romance.
“This past summer, we were all about the gold – our athletes’ gold medals, which, by the way, had the highest value of any Olympic gold medals in history at $708.”……………………………………….Full Article: Source

Posted on 10 October 2012 by VRS |  Email |Print

Physical gold market has shown signs of life but the yellow metal’s ability to breach $1800 market continues to rest with developments in Europe, US macro data and whether central banks ratchet up QE asset purchases, according to Barclays Research.
On Tuesday at US Comex, Gold for December delivery is up $4.4 at $1780.1/Oz. Price forecast: Q4 12: $1810/oz; 2012 annual average: $1691/oz……………………………………….Full Article: Source

Posted on 10 October 2012 by VRS |  Email |Print

Silver has a reputation for volatility due to its history of violent price swings. That is unattractive for those without the stomach to tolerate sudden, sharp declines. But it is often forgotten that the pendulum swings in both directions.
When silver makes moves to the upside it has the ability to outperform its peers, which can prove rewarding for silver investors. One need look no further than 2012′s third quarter (Q3) for a prime example. Silver exited the period bearing the crown of best performing commodity………………………………………..Full Article: Source

Posted on 10 October 2012 by VRS |  Email |Print

During times such as these we should place our faith in something which has historically transcended government statistics as well as political goals and semantics. For this reason many are turning to gold as their trustworthy protector from government efforts to misreport statistics affecting our daily lives by their dangerous policy making and financial stresses.
Many will struggle to understand how we can trust the gold price when it has shown volatility since the 1970s and is deemed by many to be in a “bubble.” A new paper by Erb and Harvey shows the real price of gold is now at a historical high across all 23 countries studied. They find that while the nominal price of gold has been volatile it has shown a strong trend since the 1970s, however the inflation-adjusted price of gold is volatile without a trend………………………………………..Full Article: Source

Posted on 10 October 2012 by VRS |  Email |Print

Below are tables of the best and worst performers in the third quarter of 2012 among the activelymanaged commodity funds in the Lipper Global database.
The return performance is shown in the fund’s local currency. The tables use the latest available data provided to Lipper and strip out enhanced index funds that use a very simple rules-based system of rebalancing as well as funds that are wholly focused on natural resource equities………………………………………..Full Article: Source

Posted on 10 October 2012 by VRS |  Email |Print

After gathering more than $1 trillion in total assets under management, ETFs have cemented their place in the financial world. Among the universe of nearly 1,500 products, commodity funds have garnered a lot of attention, as these products have democratized an asset class that was once difficult to reach by retail investors. Now, there are a number of exchange-traded options to help you gain exposure to your favorite hard assets, all at a low cost.
Even among ETFs, however, there can be significant differentials in fees. It’s not uncommon for two products with similar portfolios and investment objectives to sport extreme differences in expense ratios………………………………………..Full Article: Source

Posted on 10 October 2012 by VRS |  Email |Print

This summer, the worst U.S. drought in 56 years pushed grains prices to record highs. Prices of commodities such as corn and soybeans surged to all-time records as crop yields were decimated amid the unseasonably dry weather.
While the current surge in grains prices will stimulate farmers to boost production for the coming year, the grains supply shortages — which drive surges in grains prices — could become routine because of the projected increase in the global population and an expected deterioration in global weather conditions………………………………………..Full Article: Source

Posted on 10 October 2012 by VRS |  Email |Print

The exchange-traded products industry has provided investors with a new tactical tool for adding commodities exposure to their portfolios. Investors can now choose between a variety of ETPs that offer both broad-based and targeted exposure without having to encounter the difficulties and drawbacks of opening a futures account.
One of the more intriguing products on the market is the Pure Beta Broad Commodity ETN (BCM), which gives investors access to a basket of 24 different commodities. BCM’s structure and unique strategy make this ETN an appealing option for investors who wish to establish broad-based exposure to commodities over the long haul………………………………………..Full Article: Source

Posted on 10 October 2012 by VRS |  Email |Print

Staffers at the Commodity Futures Trading Commission have recommended that the regulator appeal a judge’s ruling against federal limits on commodity market speculation, and commissioners are nearing a decision on the matter, according to a CFTC official.
The CFTC general counsel is circulating a memo asking the five CFTC commissioners to vote on an appeal, according to the official, who had direct knowledge of the situation and spoke on condition of anonymity………………………………………..Full Article: Source

Posted on 10 October 2012 by VRS |  Email |Print

The Monetary Authority of Singapore will probably slow the pace of appreciation in the local dollar as moderating price pressures provide scope for measures to support economic growth, according to a survey of analysts.
Officials will curb gains in Singapore’s currency when they meet Oct. 12 by decreasing the slope of its trading band, according to 17 of 23 financial companies surveyed by Bloomberg News. Two said there’s a chance the MAS will widen the band in addition to reducing its slope. Five predict no change, while one projected a shift to a zero slope, the poll showed………………………………………..Full Article: Source

Posted on 10 October 2012 by VRS |  Email |Print

The governments of Japan and South Korea said Tuesday they have agreed to let the expanded part of their currency swap deal expire at the end of the month as scheduled, citing financial market stability and stable macroeconomic conditions.
Finance Minister Koriki Jojima said the decision was not connected to tensions between the two countries over the Takeshima islands in the Sea of Japan. The islands are called Dokdo in South Korea, which effectively controls them. The decision was “purely based on economic factors,” Jojima said………………………………………..Full Article: Source

Posted on 10 October 2012 by VRS |  Email |Print

Risks to global financial stability have increased in the past six months despite efforts by policymakers to make the financial system safer, according to the International Monetary Fund.
It said little progress had been made in making the system more transparent and less complex, and that confidence in it had become “very fragile”. The eurozone debt crisis remained the main cause of concern, the fund said………………………………………..Full Article: Source

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